The political game behind Amazon’s retreat from New York

When Stuart Appelbaum met three of Amazon’s top executives in Governor Andrew Cuomo’s office on Wednesday, he had no reason to doubt that the retail giant was still coming to New York.

Mr Appelbaum, the president of the Retail, Wholesale and Department Store Union — a frequent Amazon critic — had just spent more than an hour discussing labour issues relating to the Amazon’s plans to build a satellite headquarters in Queens. The gathering had gone well, he believed.

“We left there shaking hands. I said: ‘I look forward to working with you in the future,’” Mr Appelbaum recalled. “If they had any clue that this was going to happen today then they must be the best actors in the country. There was no indication of that in any way.”

Like Mr Appelbaum, many New Yorkers were shaking their heads in the wake of Amazon’s stunning announcement the following day that it was cancelling its investment.

Under a deal championed by Mr Cuomo, the city and state were offering $3bn in tax incentives to lure a company that was to bring an estimated 25,000 jobs and $27bn in tax revenues over the next two decades.

The decision has dealt a painful blow to a campaign begun under Mayor Michael Bloomberg, following the 2008 financial crisis, to transform New York from a city reliant on Wall Street and real estate to one that is also a world leader in technology.

Winning Amazon to set up shop in NYC is ‘wow’ — losing Amazon once you’ve won is an etching on your tombstone you don’t want

Tech companies such as Google and Facebook are flocking to New York for the same reason that Amazon chose the city in November over hundreds of rivals in an extraordinary nationwide pageant: its abundance of talent.

Still, civic boosters who viewed Amazon’s commitment as a validation were suddenly feeling bereft at its retreat.

“I think it’s going to have a negative impact in terms of the marketing and short-term economic opportunity for New York,” said Kathy Wylde, president of the Partnership for NYC group.

Seth Pinsky, Mr Bloomberg’s former head of economic development, and now a senior executive at RXR Realty, issued an ominous warning: “The opponents of Amazon who are celebrating today would do well to understand that, as hard as the challenges associated with growth are to deal with, the challenges associated with decline are much harder to deal with.”

The disappointment was not confined to the executive suite. Gary LaBarbera, the leader of the Buildings and Construction Trades Council, an umbrella group of construction unions, had been expecting the Amazon headquarters to yield 5,000 jobs for his tradesmen — not to mention many more for work on other developments sprouting nearby.

“The economic multiplier of this is incalculable!” Mr LaBarbera despaired.

The question he and many others were pondering was how the city had managed to squander a prize that was so hard won, and which seemed secure only days ago. There appeared to be culprits in all directions.

Even Amazon’s allies have blamed it for a tin-eared communications strategy and inability — or unwillingness — to engage with local residents. In recent days Mr Cuomo publicly faulted the company for its poor messaging. A New York adviser was more blunt, saying of the tech giant: “They suck at making friends!”

Amazon placed great faith in Mr Cuomo without courting influential local politicians. After conducting negotiations in secret, the company and its allies then struggled to wipe away suspicions that $3bn in tax incentives did not amount, as critics claimed, to an upfront payment to one of the world’s wealthiest companies.

But there was a broad acknowledgment that much of the responsibility rested in New York itself, where critics said that Mr Cuomo, a state governor renowned for getting his way, failed to marshal the troops, and Mayor Bill de Blasio was either absent or unhelpful.

Above all, the state’s Democratic party is being strained by the rise of a progressive wing led by Representative Alexandria Ocasio-Cortez that is inflamed by concerns about the gentrification of working-class neighbourhoods and inclined to view big business with suspicion.

“A lot of this really does come down to AOC,” a local executive who has dealt extensively with Amazon and government officials observed, referring to the 29-year-old by her popular moniker. “This is definitely an AOC moment.”

If Ms Ocasio-Cortez had not shocked the Democratic party establishment in June by ousting longtime Queens Representative Joe Crowley in a primary fight, many are convinced Amazon would still be on its way.

“Joe Crowley really controlled Queens elected officials in a way, and was much more moderate,” one local developer said.

Recommended

While Mr Cuomo and Mr De Blasio were celebrating the company at a rapturous press conference in November, Ms Ocasio-Cortez immediately sounded sceptical.

In a burst of tweets, she questioned Amazon’s resistance to organised labour and asked how many local residents would actually benefit from the 25,000 jobs it was promising to bring.

Young residents and grassroots organisers — many loyal to Ms Ocasio-Cortez and the Democratic Socialists of America — began fanning out through Queens. “No Amazon” graffiti and leaflets began to appear.

As the deal began to slip last week, Mr Cuomo blamed local politicians for pandering to save their own skins. Even so, his camp maintained faith that these politicians — after some grandstanding — would come to the table and cut a deal.

But Amazon appeared to take them all by surprise. “This is clearly unintended. They did not mean for this to happen,” a Cuomo aide said of the politicians. “The city council, the senate — they overplayed their hand.”

If so, then chief among those legislators was Michael Gianaris, a state senator from Queens, who signed a letter a year ago encouraging Amazon to come to the area but then became a leading critic.

Several people familiar with Amazon’s deliberations said a key moment came last week when Mr Gianaris was appointed to a state oversight board, giving him potential veto power over the deal.

His appointment was approved by Andrea Stewart-Cousins, the state senate majority leader, convincing the company that opposition to its plans went deeper than it had imagined, these people said.

Mr Gianaris has insisted that he was unaware of the $3bn in tax incentives when he signed the letter. In his Queens office on Thursday, he directed blame at Amazon.

“Let’s be clear, this was not a subsidy Amazon needed to function,” he said. “This was a shakedown, pure and simple. Amazon is the biggest company in the country with the richest man as its head. They did not need our $3bn, they just decided to shake us down for it.”

Mr Gianaris rebuffed requests from Amazon executives to meet to discuss the deal — although on Thursday he complained: “Part of the problem was the secrecy of this whole thing, and when we dared say ‘Can we have some answers?’ they left.”

On the streets, Rafael Jose said he and other anti-Amazon activists felt confident that the public was on their side as they waged their campaign. He wondered if Amazon was only contacting white, English speakers when it conducted polls claiming that more than 70 per cent of Queens residents supported its arrival.

“We know for a fact that this area has been experiencing a lot of gentrification and displacement and that’s the biggest concern for a lot of people,” said Mr Jose, a member of Queens Neighborhoods United.

As a realtor, Mr Jose has seen families fleeing Queens for Long Island as real estate prices have climbed in recent years. The news of Amazon’s arrival ignited another speculative frenzy, delighting landlords and property owners but unnerving businesses and residents who rent and already lived in fear of being forced out of the neighbourhood.

“Small businesses were very scared,” said Mr Jose, an ardent supporter of Ms Ocasio-Cortez — and now Mr Gianaris. Against such fears, he argued, Amazon’s pleas of prosperity meant little. “It all comes down to real estate,” he concluded.

While he and other activists celebrated Amazon’s retreat on Thursday, their joy was by no means universal. In the years ahead, politicians who opposed the deal will also have to face voters like William Chang, who held out hope that the deal might still be saved. Depending on how the economy fares in the years ahead, fending off Amazon may look less brave than foolish.

“Cuomo and De Blasio should be working on salvaging it; I would if I were them,” said Mr Chang, a Woodside, Queens, homeowner who drives an Uber in the borough. He added: “Winning Amazon to set up shop in NYC is ‘wow’ — losing Amazon once you’ve won is an etching on your tombstone you don’t want.”